Special Adviser to the Australian Government on Low Emissions Technology, Dr Alan Finkel, gave the opening address on the industry day at the 2021 UNSW Energy Future Conference. The conference took place between 18–20 October 2021.
It brought together scientists, engineers, academics, investors, industry and policymakers. They discussed emerging technologies across the hydrogen value chain, including:
- hydrogen production and conversion, storage, distribution, safety and standards, and applications
- unseen challenges with establishing the hydrogen economy including environmental issues, water supply and social acceptance.
Dr Finkel’s opening address covered:
- the importance of technology in tackling climate change
- government policies and programs such as the Technology Investment Roadmap and international low emissions technology partnerships
- the opportunities for Australia in new and emerging technologies
- some recent analysis on different production methods for hydrogen
- the importance of a robust certification scheme for an effective hydrogen value chain.
Rose, thank you so much for those kind words of introduction, and the answer to your question is that I did - I bought a Tesla back in 2015 and had it delivered to Canberra for those five years, and now as soon as we come out of lockdown I'm waiting for Toyota to deliver a Toyota Mirai which is a pure hydrogen-powered car.
Getting on with the formal part of the talk I'd like to speak to you today about the promise of hydrogen, the challenges, and some of the policy support that's available so that we can most smoothly unlock the potential.
Now you all know why we're doing this – the problem is very clear, the IPCC and scientists for decades now have been warning us about the global warming consequences to climate change. The reason why we're undergoing global warming which leads to climate change is also to a large extent very very clear, and it's carbon dioxide into the atmosphere, it's carbon dioxide equivalents like methane and nitrous oxide.
But when you're looking at total greenhouse gases either globally or in Australia, you see a pie chart pretty much like this with nearly three quarters of the emissions into the atmosphere, total greenhouse gas emissions into the atmosphere a result of energy - energy from burning fossil fuels – coal, oil, and gas.
So the simplest thing of course is just to cut back dramatically on our use of energy, but I put to you that's not going to happen. Can we eliminate it? So think about our modern civilization. If we took away medicine, we didn't have modern medicine, you don't have to go far – that's a picture from the enlightenment era, only 150 years ago – if you went back 150 years ago, it's as if medicine didn't exist. If you took away modern education, you'd go back further to the middle medieval era about a thousand years ago.
But if you take away our managed energy supply, it's literally back to the stone age for us. So we're not going to achieve the cutbacks we need on emissions simply by dramatically reducing energy supply demand, in fact it will go the other way as people emerge from poverty.
Now if you look at the history of the modern energy supply, it starts around about 250 years ago where we went from just using wood and cow manure and things like that, peat and scrapings to create a fire, to the use of coal. The use of coal in abundance transformed our society and hence we have the term ‘the industrial revolution’. It gave us a high density, transportable, manageable fuel.
Then about 120 years ago – turn of the previous century, 1900 – they discovered abundant, cheap oil, and interestingly that didn't mean that coal became obsolete. What it meant is we had a second big manageable source of energy in our system, and yes the balance between what coal was used for and what oil was used for shifted, but we continued to increasingly use massive quantities of coal and added into that massive quantities of oil.
And then in the 1950s, around the world we started discovering natural gas, and we started using that for lighting for heating for electricity generation, but it added, it didn't mean that coal was pushed aside, it didn't mean that we no longer used oil, it meant that we were using the original sources around the world of wood and manure, but also lots and lots of coal, lots and lots of oil, and lots and lots of gas.
The consequence of that is we had massive greenhouse gas, particularly carbon dioxide emissions, and we're paying the price for that. It helped our civilization to advance enormously, but we have to do something about it. And this time, and this will be the first time ever in humanity’s existence, this time the existing energy sources need to be replaced, and that's not a natural thing to occur. We need to replace heat you know fire heating with electricity. We need to replace coal in all its uses with electricity. We need to replace oil in all its uses with electricity. We need to replace gas with all its uses with electricity.
And I put it to you that will not happen naturally. It’s started – we've got lots of solar and lots of wind – but it only happened because of government intervention. The chances of a zero emissions electricity revolution to replace oil, coal and gas is about as likely as natural evolution giving you a multi-colored zebra.
We need policy – there's an externality here that's been dealt with. We're not doing solar, wind and batteries because it’s the cheapest and the easiest solution – it's getting cheaper all the time, but it started off hundreds of times more expensive than the oil and coal, and it's only because scientists pointed out to governments that we needed to do something that governments intervened with feed-in tariffs, with reverse auctions in Australia, in particular with the Renewable Energy Target.
Governments intervened to encourage industry and consumers to adopt the new clean technologies. I wrote about this earlier this year in a Quarterly Essay, and I dedicated the Quarterly Essay to an architect, Buckminster Fuller, because he said something truly enlightening. He said ‘to change something, build a new model that makes the existing model obsolete’. What he was effectively saying - don't try and just shut down and crush what you don't like. Build something better, so that people adopt the new better model and make the existing model obsolete. So we need a new model – an alternative to the existing reality.
Now, if you look at the emissions in Australia, at the sectoral breakdown, you'll see that the biggest emitting sector is electricity, stationary energy, that's buildings and industrial heating, transport and the fugitive emissions associated with the coal and oil extractions and exports. So those four on the left are really the sweet spot. They're the existing reality representing about 80 percent of Australia's emissions. The existing reality that we need to replace with a new model. And the new model is clean electricity – and Rose, you gave it away, but I'll get there in a second.
It's a three-step process. First, we have to decarbonize our existing electricity supply – that's used for machines, and air conditioning, and computing – with the combination of solar, wind and hydroelectricity, and realistically in Australia, hydroelectricity is just going to stay where it is. It hasn't changed – increased – in 30, 40, or 50 years. Just a few percent – five or six percent of our electricity generation – all the growth will come from solar and wind.
And then we've got to recognise that the built environment needs to be transformed to run on clean electricity and things derived from the clean electricity, so we have to increase our electricity supply and then we need to increase it yet again to deal with transport.
Now, those three steps won't happen sequentially. Effectively they'll all happen at the same time, and we’ll have clean electricity powering everything, and that's where we get the Electric Planet.
So all of our primary energy will come from electricity, but electricity – electrons – they're not always the most convenient, mostly they are. 85 percent perhaps of all the end use of energy will be delivered as electrons called electricity, but sometimes you need a high density fuel, or you need molecules for chemical industries, but we don't want to use oil and gas or coal, so we need to create something from that electricity or otherwise source it.
So enter stage left, the hero, hydrogen. Hydrogen that can be used for heating, hot water, building heating, industrial high temperature heating. Hydrogen that can be used for industrial purposes such as steel making, hydrogen that can be used not so much for light vehicles, but for heavy duty vehicles like trains and trucks and ships, and one day long distance aeroplanes. And in the case of Australia – in some countries but not all – hydrogen as a means (and I say hydrogen and its derivatives such as ammonia, and methylcyclohexane, and other things) hydrogen can be used as a means for exporting our solar and wind renewable energy.
Now the scale of the opportunity, it truly is almost beyond imagining, but let's give it a try.
So let's imagine a world where Australia is producing hydrogen in energy terms equivalent to our 2019 LNG exports. Now in 2019, we exported 79 million tons or megatons of LNG. The energy of that LNG would be captured in less mass than hydrogen, because hydrogen has got a higher specific energy density, so you need 33 million tons of hydrogen to get the same energy equivalent. And if we make that with electrolysis, and make some reasonable assumptions about efficiency, you'd need over 2,000 terawatt hours of electricity to crack the water to make that amount of hydrogen. Now for some of you, that will be a meaningful number, for many it won't. One way to look at that is 2,250 terawatt hours is 8 times the total national production of electricity in 2019. I'm talking about the National Electricity Market, the West Australian system, the mine sites, the Northern Territory, our total electricity production in 2019 times eight is what we would need to make that hydrogen.
It's a massive opportunity. If you did it purely from solar – and you wouldn't, you'd use solar and wind – but if you did it purely from solar, that would be a thousand gigawatts of solar capacity. I've also written that in parentheses as a million megawatts, it's the same thing, but the reason I did that is that you need electrolysis units to go with that solar capacity, and no one's ever built so much electrolysis that they've started to use the prefix giga, so electrolysis is still referred to as megawatts of electrolysis.
And globally, last year there was less than 200 megawatts of electrolysis installed, and we're going to need a million megawatts just in Australia. It's an enormous manufacturing opportunity, as well as a export resource opportunity.
Now can we do this in Australia? Can we build such a big global scale industry from scratch?
Well of course we can. We've got the know-how, we've got the investors, we've got companies lined up to do it, and we've got the experience. We did it with LNG. And it takes time. It took 10 years from 1979 when the first offtake agreement was written until the first drop of LNG was exported in 1989, and it has taken us 30 years to get to the point where we're the equal leader in the world for LNG exports.
Now because of the climate pressure, the code red alert from the IPCC report, we need to do this more quickly. But there is clear investor, consumer and government interest in doing this and I think that we will.
There are many challenges, and I just want to give you two to think about today, but there are a lot more you'll be talking about them today.
The first one that I'd like you to think about, challenge number one, I've written here ‘hydrogen is hydrogen is hydrogen’. So imagine you're a buyer of hydrogen, and you care whether that hydrogen was made with a clean manufacturing process that had no carbon dioxide emissions, versus whether it was made with a dirty manufacturing process. There's no way you can look at the hydrogen and know. So the other way you could put this is ‘Would you buy hydrogen from this man, from Vincent Price?’. Well if you look at him, you probably wouldn't. But I would buy it from him if he came bearing a certificate of origin – some proof of the quality of the hydrogen.
Now out there most people at the moment seem to use color schemes to say whether hydrogen is good or bad. But that's a bit of nonsense. Is green really zero? Is blue really bad? Is grey whatever it is? The color schemes are emotive, they don't actually give a buyer practical confidence in what the buyer is purchasing, whether the buyer is a country or a company or an individual. What we need is to measure numerically the emissions during production, whatever the production technology is. And how we do that has to be verified by an internationally accepted certification scheme and the Australian Government and other governments are aware of that, so that picture that I've got there is from a recently released document from the IPHE, the International Partnership for the Hydrogen Economy, where there's a taskforce looking at the methodology for determining these greenhouse gas emissions during hydrogen production. And Australia with France and the US is leading this certification effort, and we have a domestic scheme which is equivalent to the draft international scheme being finalised. It's been through open consultation, and now it's being finalised by the Clean Energy Regulator. This is a really important aspect of having a trusted international hydrogen trade. And I should point out that the scheme is not just looking at the manufacturing side it's a well-to-gate scheme so you could call that lifecycle analysis or specifically if you were making hydrogen from say a methane steam methane reforming pathway you'd be looking at the upstream emissions of methane as well as the production process and the carbon capture and storage.
The second challenge is the one that I speak about so often, is the lack of balance between pent-up supply and pent-up demand.
At the moment, the interest in supply far exceeds what I see as the investment in demand, and we have to do something about that. And there are many things that we can do. We can start using hydrogen for long duration storage as we bring solar and wind into the electricity system here and internationally. We can start using more and more hydrogen for heavy duty transport – it takes time but it's happening already of course. Hydrogen has many industry applications in steel making, ammonia production, and fertilizer production. And hydrogen can be used for replacing the natural gas in our distributed gas system and for export.
So let me look at some examples of those five demand opportunities. Just very very quickly racing through them. On backup and generation – the first thing you need if we're going to do long duration storage and electricity regeneration to complement batteries as we go to a high penetration solar and wind, is you need storage. And that worries me because I don't see a lot of discussion about practical storage solutions of large volumes. One that's just come up recently in Australia is a start-up company called Ardent that has got some very clever ideas about drilling incredibly wide bore shafts into the ground and building in place a 500 ton storage container. And their partner, Abergeldie, has expertise in drilling vertical mine shafts. So I think there's some real potential there.
Lavo, which is a Newcastle-based New South Wales company, really captured the world's imagination by storm earlier this year, and there they're doing a single package of storage into a metal hydride and recreational regeneration electricity with an inbuilt fuel cell.
An example of transport – the shipping industry, the international maritime organisation is committed to decarbonizing, and the seemingly preferred way of doing that is using clean ammonia made from clean hydrogen in the existing but modified gigantic diesel engines. In industry, there is the opportunity to use hydrogen to replace the carbon in metallurgical coal for steel making – the blast furnaces will go and be replaced with a direct reduction of iron device. Industry will use more and more hydrogen, clean hydrogen, to make ammonia and ideally replace the existing use of high emissions ammonia with clean hydrogen or green hydrogen. Andrew Forrest and Fortescue are very vocally and with great determination intending to do that. And an example of gas blending in Western Sydney, Jemena is planning to put up to 10 percent into hundreds of houses over the next few months or year.
Export – the real challenge there is what is the means of carrying the hydrogen? The simplest conceptually is to liquefy it and there's a picture of the Suiso Frontier, a ship that was built and launched in 2019. I think it's still the only liquefied hydrogen carrier ship, it's a Kawasaki heavy industry ship. But then of course you can convert the hydrogen to ammonia purely to carry it to the destination, where you would then reconvert it back to hydrogen or use it as ammonia, and there are hundreds of ships already available that can carry ammonia.
Another way is to take toluene and hydrogenate it and turn it into methylcyclohexane, and then you when you remove the hydrogen, bring the toluene back – and there's hundreds or maybe thousands of petroleum tankers that can do that. And a recently suggested one – it's only suggestion at this stage but it's got its international design certification – it's from a western Australian company called Global Energy Ventures, the principle is they can utilise the bulk volume of the ship more easily just by putting in giant compressed hydrogen tanks so even though the density per litre is much lower than liquefied, they're carrying several thousand tons of hydrogen in each shipment, if they go ahead. Lots of different ways of doing it.
If you're carrying it as ammonia and you split it at the other end you get a gas; it's a mixture of nitrogen and hydrogen, you need to separate out the hydrogen – the CSIRO has a metal membrane technology based on vanadium and palladium for doing that. Lots of interesting opportunities.
That map – I won't go through the details at all, but shows that there are dozens of significant projects underway in Australia all the way through from concept through to operating.
One of the particular export advantages we have in Australia is our position on the surface of the earth – that circle called a Valeriepieris Circle is fascinating because it encompasses 50 percent of the world's population and there it is sitting on the western Australian coast with easy sea access from Australia to the big population centers in southeast Asia.
Now I mentioned government policy earlier in my talk – it's important. The Australian Government's signature approach to lowering emissions is through technology, through the low emissions technology roadmap. We put out the first statement – the first stake in the ground if you like – last year, the next one is pending, depending on negotiations that are taking place at the moment. It's a principles-based framework where we acknowledge the importance for Australia, the whole of the world, to reduce emissions. But we want to do that without sacrificing economic growth and prosperity. And the conviction that technology can deliver solutions across all areas of the economy.
The vision statement in the roadmap is ‘a prosperous Australia recognised as a global low emissions technology leader.’ If you read into that you could say that's having our cake and eating it too, or as was said by a famous person recently ‘cake have eat’. Now some of you will think that that was Yoda, but in fact it was Boris Johnson at the Biden leaders’ summit earlier this year.
New South Wales last week put out a very significant hydrogen strategy backed up with $3 billion dollars worth of funding for this decade. And what intrigued me in particular, besides the three billion dollars, was that it has very specific stretch goals very much like a Japanese hydrogen strategy, like 100 refueling stations and 10,000 vehicles etc etc. So I'm very impressed with what's been done there, and we're seeing these kinds – or perhaps a little smaller scale but still very significant scale – of hydrogen strategies or road maps from all the states and territories in Australia as envisaged by the National Hydrogen Strategy that was adopted in 2019.
In terms of federal government work, I've been leading as a Special Adviser the brokering of bilateral partnerships and one in particular that we signed a few months ago was the Australia-Germany Hydrogen Accord, that was signed by the leaders of the 2 countries or agreed by the 2 leaders, and it puts 130 million dollars of co-funding into industry to industry technology demonstration projects purely in green hydrogen.
And finally, much closer to home, like where Rose and others are, there's the ARC center of excellence or the Industrial Training Centre for the Global Hydrogen Economy, and its intention as I understand it (and it's impressive) is to support industry through skills development and looking at all aspects of the hydrogen economy right through from the science to the community engagement.
Rose Amal (who introduced) and Francois Aguey-Zinsou are the co-leads, and Peta who you'll hear from in a moment leads the hydrogen taskforce within that six Australian universities, four international research institutes. It's big. It's important. It also has responsibility for contributing to the HySupply project, which is a study on the supply chain for renewable hydrogen being delivered from Australia to Germany, and that's been done with Deloitte, you'll hear from Deloitte soon, and then to some extent it's responsible – maybe just through Rose – for delivering the New South Wales P2X, the Power to X Industry Pre-Feasibility Study, because there are always going to be hard to abate industries, for which electricity won't be directly applicable, to which ammonia and hydrogen won't be directly applicable. We might need synthetic methanol and other hydrocarbons made from carbon dioxide and clean hydrogen to fulfill those needs.
Basically that's it, that's my overview, so thank you very much and back to you Rose.
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